Sensex plunges 541 points amid sell-off in Europe

European stocks extended losses on Tuesday despite a US bounceback with shares of German carmaker Volkswagen tanking as much as 20 per cent in the wake of the emissions scandal. The pan-European STOXX 600 was down 2.4 per cent. London’s FTSE 100 index was 2.2 per cent lower, the German DAX fell over 2.8 per cent and the French CAC was off by 2.9 per cent. European stocks were under pressure after the US Fed decided to hold the rates steady last week.

Making investors nervous, ADB on Tuesday lowered growth projections for India for the current fiscal to 7.4 per cent, from the 7.8 per cent earlier.

Jayant Manglik, president, retail distribution, Religare Securities, “The sudden fall in the later half pushed the equity benchmarks into the red on Tuesday as they lost over 2 per cent by the end. Initially, the index traded dull in narrow range while stock specific kept the traders busy. Sentiments were under pressure after ADB stated that weaker growth in China this year is expected to cause a slowdown in the rest of Asia. Selling pressure intensified further with decline in the European and US markets in the second half, which triggered steep decline.”

“This sharp fall clearly indicates existence of strong resistance around 7,950-8,000 zone in Nifty and now 7,700 spot would act as support. Considering the market scenario and volatility, traders should continue with stock specific trading approach and try to keep their averaged positions hedged,” he said.

Dipen Shah, head of private client group research, Kotak Securities, said: “Markets surprisingly fell in the latter half of the day due to the weakness in European markets and caution ahead of the release of Chinese economic data Wednesday. There is also uncertainty over whether RBI would cut rates in the next meeting on September 29. Going ahead, post the RBI meeting, focus will shift to the quarterly results, which may remain lacklustre for the domestically oriented sectors. Developments in China will also be closely tracked.”

Meanwhile, falling for the second consecutive day, the rupee lost another 15 paise against the dollar to close at 65.88 on sustained demand for the American currency from banks and importers amid massive fall in domestic equities. The domestic currency hovered in a range of 65.95 to 65.55 per dollar during the day before concluding at 65.88, showing a loss of 15 paise or 0.23 per cent.